Congo Nears Eskom Power-Supply Deal to Boost Copper Output

LAGOS (Capital Markets in Africa) – The Democratic Republic of Congo signed a provisional agreement to import power from South Africa that could boost copper production this year by as much as 20 percent, according to the country’s chamber of mines.

Congolese state-owned power company SNEL proposed importing 200 megawatts from South African utility Eskom Holdings SOC Ltd. at meetings in Johannesburg on April 20 and April 21, said Ben Munanga, chairman of the energy commission at the chamber.

Eskom has 1,000 megawatts available for export for as long as 10 years, but only 200 megawatts can be delivered to Congo because of grid constraints in the transmission network between the two countries, Munanga said Saturday in an interview in the Congolese capital, Kinshasa. Still, that could help to boost Congo’s copper output by as much as 200,000 metric tons, Munanga estimated.

“There’s a deficit so any effort to bridge the gap is very welcome,” said Munanga, who attended the first day of the meetings.

Congo, Africa’s biggest copper producer, has installed power-generating capacity of 2,442 megawatts, but only about half of that is operational after years of mismanagement and under-investment. SNEL estimates that demand from copper miners outstrips supply by 750 megawatts, a shortfall that has been one of the biggest constraints on output growth in the past three years. Congo produced a record 1.03 million tons in 2014, but output has been little changed since then, falling to 995,805 tons in 2015 before climbing back to 1.02 million tons last year.

Term Sheet
SNEL confirmed that that the utility signed a term sheet with Eskom outlining the main points for a 200-megawatt contract, with a view to concluding a renewable, five-year power-supply agreement soon.

“We still have a few years to go before we have new hydropower capacity on our network so if we have such an opportunity to buy we are going to take it,” SNEL spokesman Medard Kitakani said by phone from Kinshasa on Monday, adding that the offer from Eskom was unexpected.

Eskom said a deal may be signed next month.